Alcoa Files Form 10 With SEC For Planned Business Split

Alcoa (NYSE:AA) has reached a key milestone in its earlier-announced planned separation of its smelting and refining business from those that cater to aerospace and automotive markets.

The aluminium giant, in Sep 2015, said that it is splitting into two standalone, publicly-traded companies to shore up growth amid a challenging operating environment. The separation will result in the creation of two standalone, Fortune 500 entities – “The Upstream Company” and “The Value-Add Company”. The future Value-Add Company will be named “Arconic Inc.” while the Upstream Company will be renamed ‘Alcoa Corporation’ prior to the separation.

Alcoa said yesterday that it has filed an initial registration statement on Form 10 with the U.S. Securities and Exchange Commission (“SEC)” for the planned separation. The filing – an important milestone for the business split – includes preliminary detailed information (including business and strategy and historical financial information) about Alcoa Corporation as a standalone company. It is subject to change before the completion of the split.

The separation, which remains subject to satisfaction of certain conditions including final clearance from Alcoa’s board and the effectiveness of the Form 10, is expected to complete in the second half of 2016.

Alcoa’s shares closed around 2.5% lower at $9.10 yesterday.

Alcoa Corporation will consist of bauxite, alumina, aluminum, casting and energy and rolling mill operations. Arconic will include global rolled products, engineered products and solutions, and transportation and construction solutions businesses. The separation will allow both companies to pursue their own independent strategies.

Post separation, Alcoa Corporation will be a highly competitive leader in bauxite, alumina and aluminum production with a world-class asset base including the world’s biggest bauxite mining portfolio. It will also have the world’s largest alumina refining system.

On the other hand, Arconic will be a leading provider of high performance multi-material products and solutions in attractive markets including the fast-growing aerospace market. The aerospace market represents roughly 40% of the pro-forma revenues of this business.

The separation will provide shareholders with value-creating investment opportunities. It will also mark the completion of Alcoa’s multi-year transformation.

Alcoa is a Zacks Rank #3 (Hold).

Better-ranked companies in the mining space include B2Gold Corp. (NYSE:BTG) , Sandstorm Gold Ltd. (NYSE:SAND) and Coeur Mining, Inc. (NYSE:CDE) . While both B2Gold and and Sandstorm Gold sport a Zacks Rank #1 (Strong Buy), Coeur Mining carries a Zacks Rank #2 (Buy).